One week down in the WA Crown Royal Commission, this is what we learned

The first week of hearings in the Perth Casino Royal Commission collected evidence from five witnesses, spanned 19 hours, and filled 444 pages of transcripts.

The first royal commission in Western Australia in 20 years could hear of serious criminal misbehaviour, following revelations of years of money laundering and other criminal activity at Crown’s casinos.

The WA hearings to probe the future of Crown’s casino licence in Perth began on Monday.Credit: Illustration by Nine

But, in its first week, it wasn’t crime that stole the headlines, but the complex inner workings of the state government.

The five bureaucrats grilled by the commission detailed their reporting lines and responsibilities at length and revealed how the WA government had overseen the local operations of Australia’s largest gaming and entertainment group. Or rather, how it hadn’t.

Ahead of a second week of hearings commencing today, here are five of the key themes that emerged last week:

Oversight challenges

Crown operates the state’s only casino in Perth’s Burswood entertainment complex. Its operations are regulated by the Gaming and Wagering Commission.

The GWC sits within the Department of Local Government, Sport and Cultural Industries, which was formed in 2017 when the McGowan government reduced 41 state government departments to 25 through a series of mergers aimed to improve efficiency.

The DLGSC was created through the amalgamation of Sport and Recreation, Local Government and Communities, and Culture and the Arts, and Racing, Gaming and Liquor.

Following these mega-mergers, evidence provided to the royal commission painted the picture of an important regulatory function becoming lost in a massive government department.

Director general Duncan Ord said it now counts more than 800 staff, reports to five ministers, and has a vast range of portfolios to manage.

In an entertaining exchange, senior counsel assisting Patricia Cahill outlined some of Mr Ord’s many responsibilities, including the state’s cat and dog ownership legislation.

Mr Ord also acts as the chair of the GWC and said he would spend 10 to 20 hours a month on matters relating to it. He explained the GWC had no dedicated staff, no office, no printers or phones. The other members of the GWC are paid $16,000 a year and provided with an iPad each.

There are also no longer any dedicated casino inspectors, with inspectors also required to monitor other gaming, racing, and liquor matters.

Blurred lines

Mr Ord is both the director general of the department and the chair of the GWC.

Similarly, deputy director general Michael Connolly was also the deputy chair GWC and, until recently, the state’s chief casino officer, making him the bureaucrat responsible for regulating Crown.

The witnesses defended questions about the challenges of navigating their various roles within the department and were often asked “which hat” they were wearing in given moments.

Mr Ord pointed to “tension” that occurred between his roles when it came to resourcing, being torn between advocating for more resources for the GWC while also overseeing the broader departmental budget.

In a meeting with the Minister for Racing and Gaming, for example, Mr Ord said he might have to wear both hats.

“Well, if I’m talking about GWC, I have my GWC hat on,” he said.

“If I’m talking around general matters of the nature of the department or its resourcing or something, I will talk to him as the director general.”

The best way to resolve these blurred roles would be to make the chair of the GWC an independent role, filled by someone with particular expertise in casino regulation, he said. Mr Ord also recommended the role of chief casino officer become a standalone position.

Mr Connolly explained he primarily saw himself acting as the deputy director general and considered his former role as chief casino officer to be a “very limited” one, primarily related to licensing.

This is despite the role having the power to issue directions to Crown under the Casino Control Act.

Mr Connolly said he spent “half an hour in any given day at best” on matters related to being chief casino officer, and roughly 20 per cent of his total time on casino regulation generally.

GWC member Katy Hodson-Thomas recommended WA create a “totally independent” regulator, noting the lack of independence made it “very difficult to have perhaps some of those robust questioning and probing that should occur” across the board table.

Conflicts of interest

Among the most stunning revelations in week one were those about potential conflicts of interest, real or perceived, within the department.

Barry Sargeant, a former, long-standing director general, defended questions about a potential conflict of interest over a trip he took to Macau in 2013, which was paid for by Crown.

Mr Connolly was questioned at length about friendships he had sustained for years with members of Crown Perth’s legal and compliance team Claude Marais and Paul Hume.

He spoke of regular dinners, fishing trips, and even the sale of a boat to Mr Marais in about 2016 for $13,000, which netted Mr Connolly a $116 profit.

When the friendships were discovered by the media in February, Mr Connolly stood down as chief casino officer because he felt he could not continue under such “duress”.

The friendships and the sale of the boat were known to Mr Sargeant, Mr Connolly’ boss at the time, from at least 2014 or 2015, Mr Sargaent said. It appears both men considered this sufficient, until recently.

“I thought they were sufficiently declared and known but certainly hindsight is a wonderful thing and I think that I would agree now that there could be a perception of that,” Mr Connolly told the royal commission last week.

Lack of experience

With the position of chief casino officer vacant, Mr Ord directed Mark Beecroft to step in. The role was not advertised and no one else appears to have been considered by the GWC.

Mr Beecroft is the department’s director of strategic regulation and a “racing specialist”, according to Mr Ord.

Mr Beecroft told the royal commission he had “limited casino regulation exposure”, was “far from being any form of an expert on the role of the CCO” and considered someone in that role required “a far greater knowledge of casino regulation”.

The revelations followed extensive questioning of the expertise and experience of Mr Ord and other GWC members.

Mr Ord – who is a former theatre lighting designer – told the royal commission he had no relevant experience and had not completed any training in casino regulation even though it required “extremely complex and technical skills”. GWC members are also not offered any training but do have access to briefings from department staff.

The growing complexity of casino operations in Australia into the future meant such experience and training were a “necessity” for the GWC chair role, Mr Ord said.

On Thursday, Premier Mark McGowan announced Mr Ord’s retirement as part of sweeping changes to the leadership of eight government departments.

Lanie Chopping, a social worker by profession who is currently the Commissioner for Consumer Protection, will act in the role from 31 May.

Reactive approach

And then there are the allegations of criminal activity at Crown. What were the department and GWC doing to prevent that, the royal commission asked?

Evidence last week suggested the GWC was aware there were risks of criminal activity but did not take a proactive approach.

“The GWC does not have any formal procedures that related to money laundering and criminals infiltrating casino operations,” Mr Sargeant said in his witness statement.

“The GWC relies upon the appropriate agencies such as AUSTRAC, WA Police Force, the Australian Federal Police, and the Australian Criminal Intelligence Commission to deal with these type of criminal matters and inform the GWC if there were any such issues at the Perth Casino.”

Asked what inquiries he made to those entities about their work on casinos, Mr Sargeant said he didn’t make any formal ones.

“I did rely on them to raise issues with us rather than the other way around,” he told the royal commission.

Under the Gaming and Wagering Commission Act, the GWC has the power to ask the Commissioner of Police to investigate “any matter concerning a licensed casino”, and, with the approval of the minister, arrange an inquiry that “has the powers of a royal commission”.

WA’s casino inspectors do not look for money laundering or other criminal activity at Crown, the commission heard, and Mr Connolly, who oversaw the regulation of the casino, said he didn’t realise junket tour operators at the casino created risks of money laundering or other crime until media reports made such allegations in 2019.

“Obviously in more recent times those things have been highlighted but as a government casino inspector, we don’t have access to that sort of information,” he said.